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South China Morning Post –
THURSDAY, OCTOBER 7. 1971
Britain scales down defence request
The first reaction to the announcement of the £40 million defence agreement with the United Kingdom will be one of relief that Hongkong's negotiators managed to persuade Britain to lop £20 million off their original request.
Sir David Trench quite rightly pointed that “a contribution of this magnitude (£60 million) was quite out of the question and quite unreasonable in relation to the heavy calls which Hongkong will have on its resources over the next few years.
Whatever arguments may be adduced in favour of Hongkong's ability to pay and the value of the Garrison as a source of confidence to businessmen and investors, we can ill-afford an increase of this dimension.
As it is the amount has doubled (from £20 million over the last four-year period) though in fact the actual cash contribution to Britain is proportionally lower – 30 per cent against 75 per cent. The difference is to be made up in expenditure on works and buildings and the latter will one day revert to Hongkong.
An important point in the new agreement is that while Hongkong will be spending 70 per cent of the defence contribution on new buildings required by the army this will have the ultimate effect of releasing a sizeable area of land – 520 acres from various parts of Hongkong and the New Territories.
While it is not yet possible to put a price on this land both its value and utility are assured. So that in a very real sense our expenditure on the military building programme will not only provide additional capital assets to Hongkong but in time release land capable of being sold or developed for community use.
The other important factor in considering this agreement is what Mr C. P. Haddon-Cave referred to yesterday as the economic benefit to Hongkong of having the services stationed here. He quoted a figure of £8 million.
In fact, service expenditure locally is in the region of £15 million a year but, as is the case in tourist expenditure, about £8 million or 55 per cent is retained.
There may be strong feelings still that colonial Hongkong should not have to pay so much for the maintenance of its Garrison and that this is a
legitimate charge on the sovereign power. Hongkong has however been paying some contribution for over a century and the general view will be that because of the importance of the Garrison to our economy and because we are able to make a token contribution to its upkeep we should be prepared to mect part of the cost.
In fact, Iyitain estimates the Garrison will cost in the region of £140 milion over the next five years and our direct cash contribution will amount to less than a tenth, or 28.5 per cent overall which is fractionally less than Our percentage contribution in the previous year.
The new agreement is therefore one with which Hongkong can feel moderately satisfied since there are also clauses which allow for variations should some of the present estimates prove unrealistic before the agreement terminates.
K